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UPDATED: Italy's financial police on Tuesday said they had broken up a ring of companies they believe used false accounting to defraud the state out of €1.7 billion ($2.2 billion) of tax.

"The illegal activity has led, over the years, to damages to the state... whose total sum exceeds €1.7 billion" since 2001, the financial police said in a statement.

Police said two Rome businessmen, Pierino Tulli and Maurizio Ladaga, created a system using false invoices issued by intermediary subcontracting companies in areas such as security services and industrial cleaning to perpetrate the fraud.

Using these false invoices, large sums of money were put into the accounts of shell companies. The funds were then taken out in cash and deposited in San Marino or Luxembourg, and the companies declared bankrupt, the police said.

A total of 62 people are suspected of taking part in the fraud to some degree.

Some 70 police were involved in the investigation across Italy, which also led to the seizure of goods worth more than €100 million, including 100 properties, two companies and hundreds of bank accounts.

Chronic levels of tax evasion, by both individuals and companies, are considered one of the biggest problems faced by the eurozone's third-biggest economy.

A government report published last month estimated that Italy's revenue shortfall is running at €91 billion per year, roughly the equivalent of six percent of gross domestic product (GDP).

The finance police uncovered 56 billion euros in tax evasion last year, of which the tax service recovered €13 billion. Last week, the head of the tax service, Rossella Orlandi, said she expects to recover a similar amount this year.

Prime Minister Matteo Renzi has promised a crackdown as he battles to bring Italy's budget deficit into line with eurozone rules and the government is counting on raising €3.8 billion from such measures next year.

Economy Minister Pier Carlo Padoan has vowed that there will be no repeat of the amnesties for tax dodgers which past governments have used to encourage a short-term inflow of payments but critics say is counterproductive in the long-term.

The tax report also revealed that more than 700,000 snap inspections carried out last year found irregularities in the income declarations made by 94 percent of the companies or self-employed professionals inspected.

Well-known names have been caught up in the fight against tax evasion, including Dolce&Gabbana and former prime minister Silvio Berlusconi.